Arcus/RREEF in rejected bid for UK ports

Arcus European Infrastructure Fund, RREEF and Peel Ports have attempted to acquire UK ports operator Forth Ports for £612m. But Forth Ports has rejected the offer, saying it undervalues its business. The consortium is considering a higher bid with Peel Group mulling the sale of a stake in its airports business to help shore up any future bid.

Forth Ports, the UK’s only listed ports operator, has rejected a takeover bid from a consortium of Arcus European Infrastructure fund, RREEF and Peel Ports, saying it undervalued its business.

The so-called Northstream consortium, which already owns 27.4 percent of Forth Ports, initially approached the UK ports operator at the end of January with a bid of £12.85 (€14.25; $19.45) per share. Following its rejection, the consortium increased its offer to £13.40 per share, valuing the company at £612 million. But that bid was also rejected, with Forth Ports saying that both “proposals fall far short of the value of Forth Ports”.

Northstream said its latest bid represented a 28.5 percent premium to Forth Ports’ share price in early February, at the time the second offer was placed. However, the consortium said it might consider placing a third bid, if it is allowed to conduct due diligence on Forth Ports. Forth Ports said it was willing to meet with the consortium after its 2009 results presentation, scheduled for March 22.

In related news, UK newspaper Mail on Sunday reported that Peel Group, the parent company of Peel Ports, was considering selling a stake in its airports business to help shore up any future bid for Forth Ports. The paper said talks were being held with Canada’s Vancouver Airport Services. 

Peel owns Liverpool John Lennon airport, City Airport Manchester, Robin Hood Doncaster Sheffield and Durham Tees Valley airports, the sale of which could raise around £200 million, the newspaper said. Peel Airports could not be reached for comment at press time.

All members of the Northstream consortium are shareholders in Forth Ports. Arcus owns a 23.4 percent stake in the Scottish ports operator, having bought 20.4 percent when it was still the European Infrastructure Fund of Australian investor Babcock & Brown. Peel Ports, part of UK property and infrastructure group Peel, owns a 3.5 percent holding in Forth Ports with RREEF, Deutsche Bank’s infrastructure fund, owning a 0.5 percent consideration.

Forth Ports owns a portfolio of seven ports in the UK, including Tilbury in London, Grangemouth, Scotland’s largest container port, and Leith in Edinburgh. In addition, it owns a 33 percent shareholding in Tilbury Container Services, a substantial property portfolio and a number of renewable energy projects, the company said in a statement.